Prometheum Ember Capital LLC, a subsidiary of parent company, Prometheum Inc., announced it has received a first-of-its-kind approval from the Financial Industry Regulatory Authority (“FINRA”) to operate as a special purpose broker-dealer (“SPBD”) for digital asset securities. This approval permits Prometheum Capital to custody digital asset securities on behalf of retail and institutional clients.
With the approval of the SPBD, Prometheum Capital will serve as a qualified custodian. Standing in contrast to crypto exchanges and other trading platforms in the U.S. that operate only under state licenses, Prometheum Capital is subject to the Securities and Exchange Act (“SEA”) 15c3-3 Customer Protection Rule as required under federal securities laws.
“Digital asset investors in the U.S. are currently custodying cryptocurrencies that are securities through platforms that don’t offer the same SEA 15c3-3 customer protections required by the federal securities laws. These platforms’ non-compliance may pose serious risks to both retail and institutional investors,” Prometheum, Inc. Co-CEO Aaron Kaplan said. “We expect that custodying assets in an SEC-registered broker-dealer will provide the regulatory protections needed to re-establish investor confidence, increase institutional adoption, and allow the industry to flourish.”
This status marks the first time that digital asset securities will be custodied in a FINRA member firm and a SEC registered broker-dealer subject to the federal securities laws. These laws require extensive policies and procedures designed to protect customers, counterparties, and market participants from the risks and consequences of digital asset security fraud, theft, or loss.
In 2017, Aaron Kaplan and his co-founder Benjamin Kaplan created Prometheum after recognizing a lack of investor protection in the digital asset sector. Aaron and Benjamin set out to build the first federally regulated end-to-end ecosystem for digital asset securities. The SPBD is a critical step toward completing their vision for building a safer, more responsible industry.
Separately, Prometheum ATS, a FINRA member firm and a SEC registered ATS, launched in October 2022, subject to the federal securities laws. Prometheum ATS can integrate with its clients’ securities trading systems to allow access to and trading of digital asset securities.
Founded in 2017 by a group of Wall Street attorneys, Prometheum is a blockchain-focused company building an end-to-end ecosystem for the trading, custody, and settlement of digital asset securities.
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